Regent Plumbing Corporation provides plumbing services. Selected transactions of Regent Plumbing Corporation are described as follows:
a) Received $8,000 cash and issued common stock to Sharon Regent.
b) Paid $5,000 cash for equipment to be used for plumbing repairs.
c) Borrowed $11,000 from a local bank and deposited the money in the checking account.
d) Paid $900 rent for the year.
e) Paid $200 cash for plumbing supplies to be used next year.
f) Completed a plumbing repair project for a local lawyer and received $3,000 cash.

Calculate the net income. Assume plumbing supplies of $200 are left at the end of the accounting period.

Question

Regent Plumbing Corporation provides plumbing services. Selected transactions of Regent Plumbing Corporation are described as follows: 
a)	Received $8,000 cash and issued common stock to Sharon Regent.
b)	Paid $5,000 cash for equipment to be used for plumbing repairs.
c)	Borrowed $11,000 from a local bank and deposited the money in the checking account.
d)	Paid $900 rent for the year.
e)	Paid $200 cash for plumbing supplies to be used next year.
f)	Completed a plumbing repair project for a local lawyer and received $3,000 cash.

Calculate the net income. Assume plumbing supplies of $200 are left at the end of the accounting period.

Quizplus · Accepted Answer

Net income is calculated by subtracting expenses from revenues. Here, the revenue is $3,000 from the plumbing repair project. Expenses include rent ($900) and plumbing supplies used ($0, since $200 supplies are left at the end). Equipment purchase is not an expense but a capital expenditure. The loan does not affect net income directly. Thus, net income = $3,000 (revenue) - $900 (rent) = $2,100.

Regent Plumbing Corporation Provides Plumbing Services